American Apparel Inc. last week sold $1.67 million worth of its common shares to its founder and chief executive in a private placement. Proceeds are to be used to fund equity grants to managers as part of their compensation package, the company said.
Dov Charney, the Los Angeles apparel company’s largest shareholder, purchased nearly 1.13 million shares at an average cost of $1.48 each, the company said in regulatory filing. Combined with purchases made last month on the open market, Charney now controls more than 41 million shares, about 57 percent of the company.
The company’s board last month approved the grant of more than 6.5 million restricted shares, representing about 9.1 percent of the outstanding shares, to executive and non-executive management employees and some consultants.
American Apparel, which is scheduled to hold its annual shareholder meeting on Friday, has been focusing on recovering from slumping sales during the recession and production inefficiencies while it trained replacement workers following immigration-related layoffs last year. Last month it warned that it expects a loss from operations this year and might again fall out of compliance with a lender’s covenant next year.
Shares on Monday closed unchanged at $1.60 on the New York Alternet.